Affordable Housing Scores with Freddie Mac SCR Notes
May 16, 2016
Our K-Deals set the industry standard for securitizing mortgage loans backed by multifamily apartment properties. They have successfully enabled us to finance multifamily properties, including affordable rental housing, while attracting private capital and minimizing U.S. taxpayers’ exposure to credit risk. That’s why we created yet another innovative way to transfer credit risk while supporting the affordable housing market and providing new investor opportunities: Structured Credit Risk Notes (SCR Notes, pronounced SCORE Notes).
What are SCR Notes?
SCR Notes are unsecured and unguaranteed bonds issued by Freddie Mac whose principal payments are determined by the delinquency and principal payment experience of a SCR Note reference pool. The reference pool consists primarily of multifamily bond mortgage loans originated during a specified period of time, generally within the past nine years. We transfer some of the credit risk from our credit guarantees on the bond mortgage loans in the reference pool to credit investors who invest in the SCR Notes. Investors are expected to find that SCR Notes help provide them with stable and predictable performance.
The First Released SCR Note
The first SCR Note (Series 2016-MDN1) settled today. It is made up of a $1 billion reference pool of more than 50 mortgage loans that primarily back state and local housing finance agency tax-exempt bonds for which we provide credit enhancement. Read more about this offering.
Freddie Mac plans to offer one or two deals each year going forward. Click here for more details.
This announcement is not an offer to sell any securities of Freddie Mac or any other issuer. Offers for any given security are made only through applicable offering circulars and related supplements, which incorporate Freddie Mac's Annual Report on Form 10-K for the year ended December 31, 2015, filed with the Securities and Exchange Commission (SEC) on February 18, 2016; all other reports Freddie Mac filed with the SEC pursuant to Section 13(a) of the Securities Exchange Act of 1934 (Exchange Act) since December 31, 2015, excluding any information "furnished" to the SEC on Form 8-K; and all documents that Freddie Mac files with the SEC pursuant to Sections 13(a), 13(c) or 14 of the Exchange Act, excluding any information furnished to the SEC on Form 8-K.